Guess? brand enjoys tremendous momentum worldwide

28 May '10

5 min read

Net revenue from the Company's Asia segment increased 50.4% to $48.6 million in the first quarter of fiscal 2011, from $32.3 million in the prior-year period.

Licensing segment net revenue increased 14.6% to $25.3 million in the first quarter of fiscal 2011, from $22.1 million in the prior-year period.

Operating earnings for the first quarter of fiscal 2011 increased 48.5% to $71.3 million (including a $5.0 million favorable currency translation benefit) from $48.0 million in the prior-year period. Operating margin in the first quarter increased 230 basis points to 13.2%, compared to the prior-year's quarter. This margin expansion was the result of higher product margins in all segments along with occupancy leverage due to the positive same store sales, partially offset by the impact of the accelerated pension cost amortization.

The Company's effective tax rate declined to 31.0% for the first quarter of fiscal 2011, from 33.0% for the first quarter of the prior year.

Outlook
The Company's expectations for the second quarter of fiscal 2011 ending July 31, 2010, are as follows:

• Consolidated net revenues are expected to range from $560 million to $575 million.
• Operating margin is expected to be around 16.0%.
• Diluted earnings per share are expected to be in the range of $0.65 to $0.68.

The Company updated its outlook for the fiscal year ending January 29, 2011, which is now as follows:

• Consolidated net revenues are expected to range from $2.35 billion to $2.40 billion.
• Operating margin is expected to be about 16.5%.
• Diluted earnings per share are expected to be in the range of $2.80 to $2.85.

Based on the continued strengthening of the US dollar against the Euro, this full year outlook includes a further negative translation and margin impact on diluted earnings per share of $0.16 for the remainder of fiscal 2011. This is in addition to the $0.12 negative translation impact that the Company had initially expected for the same period.

Dividend
The Company also announced that its Board of Directors has approved a quarterly cash dividend of $0.16 per share on the Company's common stock. The dividend will be payable on June 25, 2010 to shareholders of record at the close of business on June 9, 2010.

Change in Segment Reporting
In the first quarter of fiscal 2011, the Company revised its segment reporting to include its North American wholesale and Asia operations as separate segments. The Company believes this segment reporting better reflects how its five business segments - North American retail, North American wholesale, Europe, Asia and licensing - are managed and each segment's performance is evaluated. The North American retail segment includes the Company's retail operations in North America. The North American wholesale segment includes the Company's wholesale operations in North America. The Europe segment includes both wholesale and retail operations in Europe. The Asia segment includes both wholesale and retail operations in Asia. The licensing segment includes the worldwide licensing operations of the Company. All amounts for fiscal 2010 have been revised to conform to the fiscal 2011 presentation and are included with this release.

Guess? Inc

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